tv [untitled] November 10, 2012 9:30pm-10:00pm PST
>> clerk calvillo: president chiu. >> president chiu: submit. >> clerk calvillo: supervisor campos. >> supervisor campos: i want to take an opportunity to thank a number of folks, specifically the police department, members of the police station, and mission station, as well as violence prevention workers who have been working for the last week and a half, on a number of things in the mission district, and we've had a number of events in the last few days, beginning of course with the celebration of the giant's victory, and then on that same day, we had halloween in the mission, and then two days later, we had dia de los muertos. i just want to thank the police officers at mission station for all the work that they have done
in the last few days to keep our neighborhood safe. i also want to thank the violence prevention workers from the community response network and other organizations that have also been out on the street working with the police department to keep our neighborhood safe. i just want to thank them for a relatively quiet time in the last two days in the mission. the rest i submit. >> clerk calvillo: thank you. supervisor elsbernd. >> supervisor elsbernd: thank you, madam clerk. today, i'm introducing, after 78 years of a decision that i think was made inappropriately by the city, a settlement that will let the city take a look at -- have a good public process and look at what the highest and best use of 14 acres of pristine lakeside land can be at lake merced. as you know the city has been in a rather difficult position with the pacific rod and gun club at lake merced. after many months, some extent
years of debate with the gun club i'm pleased to bring forward a settlement that the gun club has agreed to, that will set in place a process by which the rod and gun club will largely be exiting the premises, and much more importantly, be participating in the environmental clean up that needs to be done. for decades the work -- not the work, the activity that happened at the rod and gun club caused significant environmental damage to lake merced, by some estimates over $10 million and thankfully the settlement reached by the city attorney and the puc of the rod and gun club will be participating in the cleanup cost. so i'm pleased to bring this forward, pleased we're finally bringing in i won't say conclusion to the process but beginning the final steps in ending that use out there, and finally allowing the public to have a discussion that i think
the public has wanted to have for decades is a rod and gun club truly the highest and best use of 14 acres of land and city and county of san francisco particularly over that beautiful lake. and that's my submission. >> clerk calvillo: thank you, supervisor. mr. president, seeing no other names on the roster that concludes roll call for introductions. >> president chiu: thank you. why don't we go to general public comment. >> clerk calvillo: the next item on the agenda is the opportunity for the public to comment generally for up to two minutes on items within the subject matter jurisdiction of the board, including those items on the adoption without reference to committee calendar. please note that public comment is not allowed on those items which have already been subject to public comment by a board committee. speakers using translation assistance will be allowed twice the amount of time to testify. if a member of the public would like a document to be displayed on the overhead projector state such and -- >> president chiu: thank you. our first speaker.
>> good afternoon. stop the corporate rape of our public library, don't give money to the friends of the library, don't accept money from the friends of the library. people are finally starting to realize how destructive the corporate influence on our public institution has become. people are also starting to recognize how fragile our democracy really is. one of the values of the corporations is that there is never accountability because it might interfere with profit. one of the values of democracy is that there has to be accountability or the people have no power. the values of the united states used to be that it belonged to the people. now, what we see, over and over again in our society, is the mechanisms that subvert democracy to protect and promote the interest of private money. most people recognize, at least in the abstract, that there are virtues of open government that are worth more than the few pennies of a corporate donation.
if we want democracy, we need open institutions of knowledge that allow access to the truth. these institutions of knowledge are sunshine in government, a free press, and just as importantly, public libraries. it is no accident that the san francisco public library is the worst example of the privatization and subverting of democracy that we see everywhere. once our institutions become a private income stream the private money wants power and exclusiveness. the fantasy of their -- of aristocracy is what they're buying and the destruction of democracy is what they expect for their money. it once would have been considered unthinkable that the board of supervisors would meet on election day, respect for the power of the vote is democratic accountability itself, the destruction of the truth is the destruction of democracy itself, and that's why the lies cost more than the money.
please -- >> president chiu: thank you. next speaker. >> good afternoon, supervisors. my name's douglas -- i've lived in san francisco for 60 years. i would like to say that i am very disappointed, this thursday, the committee hearing for gao has been canceled. i would like to offer a suggestion for are a new name of the committee. why don't we call it the government absent and obstruction of justice committee. that's just a suggestion. so you don't have to take it seriously. secondly, i noticed that after the mirkarimi decision, the mayor has been saying some very interesting things. i thought it was pretty interesting about the orange jacket. so we'll leave that alone. but he did suggest, in his speech in front of the parade, that everybody is supposed to be
working together. so i propose that the mayor and the sheriff have a public handshake, and show that there's no hard feelings. and if that doesn't happen, then i would like a committee hearing by the board of supervisors to see why it's not happening. also, i would like to suggest that, in order for the city operations committee, since they took the time to hold a hearing on the nudity, why there is still no public discussion of a dead gay man named joe samolstan that died under controversial circumstances at san francisco general hospital in 1999. i guess his life isn't worth a death discussion right now while we can argue back and forth about -- thank you.
>> president chiu: next speaker. >> good afternoon, board and president chiu. if i haven't been tired i might have contacted the san francisco giants parade organizer because after she sang san francisco in the beginning opening, i would have followed it through and came in with -- ♪ california, here i come, right back where i started from, where -- of flowers bloom in the sun at dawning each bird is singing -- don't be late, that's why -- the san francisco giants, aren't they great ♪ open up that golden gate, city winning, giants winning, here we come. on the way over i was kind of thinking, it's kind of still
kind of sad because -- ♪ you don't bring former supervisor ed jew flowers anymore. ♪ you hardly talk to him anymore when he comes in the door and he talks on the floor ♪ playing with the city's heart, you know it isn't really smart. ♪ the city joker is the only fool, will do anything for you ♪ you'll maybe get another dime. ♪ it ain't going to be a city, a city that really shines. ♪ you know, you know i feel like i need some more, and you want to bring it, bring it some, don't you bring it on the floor. ♪ playing with the city, tony bennett heart, you know it ain't really smart.
♪ the joker is the only city fool that will bring and help you ♪ thanks. >> president chiu: thank you. any other members of the public wish to speak in general public comment? general public comment is ended. madam clerk, could you go to the adoption calendar. >> the clerk: items 18 through 21 are being considered for immediate and unanimous adoption without committee reference and will be acted on by a single roll call vote. it can be considered separately. >> president chiu: would anyone like to sever any of these items? roll call vote on the adoption calendar. >> clerk calvillo: supervisor cohen, aye. supervisor elsbernd, aye. supervisor ferrell, aye. supervisor kim -- >> president chiu: order please. public comment is over. madam clerk, back to roll call. >> clerk calvillo: kim, aye. supervisor mar, aye. supervisor olague, aye.
supervisor wiener, aye. supervisor avalos, aye. supervisor campos, aye. president chiu, aye. supervisor chu, aye. there are 11 ayes. >> president chiu: those motions are approved and resolutions adopted. colleagues, we have a couple of 3 pm special orders. why don't i suggest that we recess until 3 pm. >> prospect the board of supervisors meeting is >> president chiu: good afternoon. welcome back to the board of supervisors meeting of tuesday, november 6, 2012. madam clerk, could you call our 3 pm special item, item 8 through 11. >> clerk calvillo: the board of supervisors has agreed to sit as a committee of the whole, as they approved file 121080, item 18 on today's agenda to sit for a public hearing for persons
interested in adopting resolutions associated with various real property leases located at 110 12th street, stevenson street, and market street. >> president chiu: let's open up this hearing. let me ask first supervisor kim, do you have initial comments you would like to make as the district supervisor or shall we go to the presentations? >> supervisor kim: there is a presentation by john updike and mr. barnes is here from the city administrator's office but we are on a tight timeline to approve these leases for relocation for several of our department offices from 875 stevenson with an early termination and i believe that the city's administrative office worked really hard to ensure that this didn't have impact on our budget cycle and i appreciate those efforts. >> president chiu: supervisor chu. >> supervisor chu: they explained this to me previously, but in our committee we do have
it as a weekly meeting, generally items do get scheduled pretty easily in those committees so i want the department to address the reason it did not go through committee. >> president chiu: why don't we hear from the department of real estate. >> thank you, president chiu. good afternoon. john updike, director of real estate. members of the board, first i want to thank you for holding this hearing on this matter, three items. one is an exit agreement from our current property we occupy to our entry agreements to new properties to replace the property from which we're leaving. so i'll give you first the basic terms of what is before you and then i'll speak to the issue of timing and why this is before you today in the fashion that its before you. currently, we occupy space at 875 stevenson street. we've been there since approximately 1994, as a temporary location. at one point, leasing 158,000
square feet at 875 stevenson street. we've made concerted effort over the years to move from that location into preferably owned spaces to create a much more tenable expense stream for us, and stabilize our expenses of occupancy. so we have reduced that amount in 2009, we were down to 116,000 square feet and now we're at 81,400 square feet at 875 stevenson street. that property is right behind what's called 1355 market street, or what's been rebranded as market square, where trirt an --twitter and others have mod into. that resurgence has lit a fuse to move forward with new improvements by the ownership of both buildings, which is forcing the item before you today of an early exit from 875 stevenson.
our current lease agreement allows us to remain on the premises until may of 2015. so the one agreement, that has us exiting, would call for an early exit by no later than february 4, 2013. in consideration for that early exit, we've negotiated a payment to cover the cost of the move itself, as well as the increased cost of occupancy because rental rates have increased since we struck the agreement at 875 stevenson. so that's sort of where we're at, and why we're leaving. the other question is where we're going. so we have, at 875 stevenson street our repromail operations, treasurer tax collector, assessor, recorder, business property division, department of public works, bureau of street use and mapping, human resources, department of public
works and general services agency, as well as city attorney's office claims division. all within the footprint of 875 stevenson. the majority of those folks would move to one location, 1155 market street where we have negotiated a new lease. 1155 market street was the headquarters location of the sf puc. so you may recall they occupied both that building and the building next door at 1145 market street. so there's no confusion i'll refer to 1155 as the headquarters location. that building is owned by the lors corporation although you see the agreement is with a limited liability company that is a subsidiary of lors corporation recently purchased within the last two years. we've negotiated what we think is a favorable agreement that is of a term of 10 years at 1155 market street. we do have the right to exit
after five years, or after 92 months. so we have two opportunities to decide if there is a better location, or part of a greater plan to consolidate services, we have those exit opportunities from 1155 market street. the initial lease rate is $31.67 a square feet. that jumps in the second year to 39.14 a square foot and then 3% increases per year. the reason for the big jump between year one and year two is that year one is included a few months of what's considered free rent, and the ownership preferred to simply blend that benefit over the term of the first year. included with that rate is a tenant improvement allowance of $25 a square foot and then ability to amortize or pay for
over time a 35 dollar square foot tenant improvement allowance over the initial 10 year term. the second entry agreement to cover the relocation of repromail which was sought to be an inappropriate use at the office building of is 155 market we were fortunate enough to find a location at the intersection of 12th street and south van ness, 110 12th street also has an address of van ness. it would be single use, a little over 10,000 square feet in size. we believe it's ideally situated to service our repromail operations, has a small parking area/yard and ability for adequate loading and very approximate access to the civic center which is the main client base for repromail operations. that particular lease is a 10
year lease as well, with an exit any time after five years. so we have a continual right to exit the property after the fifth year. the initial rate there is $30.95 a square foot per year. that increases 4% per year. the last one let me speak to briefly the exit from 875 stevenson street, the terms of that agreement are that the city completely vacate the premises by no later than february 4, 2013. which we are primed to do. if we accomplish that successfully, we will receive payment, over all, two different payments but a sum of 3,250,000. so that's the consideration for the early exit. there is some fairly intense calculations in your board package that shows that that compensation adequately covers our physical cost to move.
it covers cubicle refinishing, new cubicle acquisitions were necessary although we're pretty much moving around our exiting furniture. we're trying to make this a green efficient relocation. and covers most importantly the differential in the rent. for the rest of this fiscal year and the full term of next fiscal year. so the budget impact of this move is deferred to fiscal year 14-15. that's somewhat consistent with what we would have faced if we hadn't done this agreement. so but for this agreement we would remain at 875 stevenson street, where we do not have a renewal option, and in mai of 2015 we would have had to have found a location to move to. so we knew this day was coming. this accelerates that day but it brings to the table a fiscal partner to help ease the fiscal impact of the move.
we speak to timing. so the reason this is before you, the nature that it is, as opposed to the normal course of a budget analyst review, budget and finance committee hearing, and then to the full board which frankly would have been my preference, is that we were squeezed, really, on both ends. so we had the ownership of 875 stevenson being very clear to us that that exit date of february 4 was firm, there was no negotiating that. once we negotiated the date we had, there was no extension possible. and there is a fiscal penalty for every day delay of our exit in this agreement. we will receive less money from shornstein for every day of delay. so if we leave on february 5, that will cost the city $10,000 in reduced revenue from that $3.25 million. it's $10,000 a day for the first
week, $20,000 a day for every week thereafter. so clearly there is motivation for us to be timely in our exit. secondly, on the entry, there's only so many days between now and february 4, plus we have -- the worst time of the year to put this all together, during the holiday season. so when the construction schedule was coming together, many of these things working in parallel, we found that, because of the one week window next week, where we do not have a board meeting, that one week was absolutely critical from a standpoint of ordering furniture and other expenses that the landlord will front as is typical in a landlord-tenant agreement. the landlord will front money on an executed lease, but not on a non-executed lease. so reasonably so, we needed to get this item to this board to
see the lease approved before further expenditures would be made by the landlord on our behalf, or really on their behalf in order to secure us as a tenant. so i hope that helps give a little perspective as to the timing. certainly happy to answer any questions you may have about any one of these three agreements. thank you for your time in allowing this process to go as it has. >> president chiu: colleagues, any questions to department staff? supervisor kim. >> supervisor kim: thank you. i had one quick question. this is the second time i've seen, in the lease, us using kind of a landlord advances to front the tenant improvements at an 8% enterrate. being that we're seeing this over and over again i think several of my colleagues has said this is very high if we do choose to participate, and this came up with the department of environment. i was wondering if the department of real estate is thinking in the future, if there are other ways that we can borrow money for these tenant
improvements at a lower interest rate. >> well, that's a very good question, and it's timely. because we are seeing this more and more frequently. and the reason we're seeing it more frequently is that the market is changing and there is less of an allowance provided by landlord than there was when the market was softer. so as this market continues to heat up there is less advantage to a tenant. and because of that, then we have to amortize our improvement costs. the challenge we have is each one of these individual deals is have fairly small so we're not talking about a large sum of money which we would normally think of in terms of a certificate of participation, or other fiscal mechanism we might have to borrow funds at very competitive rates. so we're in a market just like any other tenant is in the market. and what landlords will charge is in this 8% range. we do our best to negotiate something lower but that's where
the market stands. i've talked to -- about this concept of could we find a different mechanism to self-finance improvements. we have found where new york city did accomplish that, but it's on a much grander scale. so if there is the possibility perhaps to bundle properties, that might get us enough heft of what we want in debt, and perhaps get a decent return but for small agreements it's very difficult to do anything other than what we're presenting to you at this 8% rate. we are -- i do want to make mention though that our rough order of magnitude budget at this point has us considerably below what our availability of funds is at 35 a square foot, we're probably 80% of that and we're seeing already value engineering opportunities where that number will only go lower. but in abundance of caution we're providing you numbers that assume full amortization of the
entire 35 a square foot. >> president chiu: supervisor campos. >> supervisor campos: thank you, mr. president. thank you for your presentation. just a quick question, just an informational question. there is a way to keep track of how much the city is spending on these kinds of improvements, collectively? i don't know how many of these deals we have, where we're actually, you know, paying or borrowing the money at this interest rate. but to the extent that the individual agreement, you know, is de minimus in terms of the amount, it might be useful to just keep track so that we at least can consider different ways of dealing with them collectively. >> that's an excellent idea. i'm sure we can work with the controller's office to put together a working matrix as we go forward. >> president chiu: any additional question to city
staff? thank you very much. let me ask if there are members of the public that wish to speak on this item. seeing none, public comment on this item is closed. and colleagues, unless there is further discussion, this hearing has been held, and i will close it and file it. and we have in front of us items 9, 10, 11. why don't we -- unless there are additional comments, let's take the items in order. madam clerk, could you call the roll on item 9. >> the clerk: supervisor cohen, aye. supervisor elsbernd, aye. supervisor ferrell, aye. supervisor kim, aye. supervisor mar, aye. supervisor olague, aye. supervisor wiener, aye. supervisor avalos, aye. supervisor campos, aye. president chiu, aye. supervisor chu, aye. there are 11 ayes. >> president chiu: the resolution is adopted. item 10.
>> clerk calvillo: item 10, supervisor cohen -- >> president chiu: why don't we do this same house, same call. without objection this resolution is adopted. item 11, same house, same call. without objection this item is adopted. madam clerk, could you please read the in memories. >> clerk calvillo: today's meeting will be adjourned in memory of the following individual, on behalf of supervisor carmen chu for the late esther -- >> president chiu: any more business in front of the body? >> clerk calvillo: that concludes our business for today. >> president chiu: thank you, ladies and gentlemen. this meath i -- meeting is adjourned.